Opinion No. DM-66Re: Whether a hospital district mayconstruct a building to lease to a privatephysician and whether it may use excessmonies in its interest and sinking fundaccount to finance construction of thebuilding (RQ-122)

Dear Ms. Rivera-Worley:You have requested our opinion regarding whether the Val Verde HospitalDistrict (hereinafter the "hospital district") may construct a building to lease to aprivate physician. You have informed us that the hospital district currently leases aportion of its physical plant at Val Verde Memorial Hospital (hereinafter the"hospital") to private physicians who operate the Angelo Dialysis Center, Inc. Theprivate dialysis center provides renal care for patients of the hospital. The dialysisclinic currently needs to expand its facilities, and there is no additional spaceavailable at the hospital. The hospital district has agreed to build a separatestructure on the hospital grounds which it intends to lease to the dialysis clinic for aperiod of ten years. The dialysis clinic would make monthly lease payments for theuse of the building. The hospital district also proposes to use excess funds from itsInterest and Sinking Fund Account to pay for the construction of the building.With respect to the hospital district's plans, you ask the following:(1) whether the hospital district may construct a building onthe hospital grounds owned by the hospital district to lease to aprivate physician for the purpose of providing dialysis services;and(2) whether the hospital district may use the excess funds inits Interest and Sinking Fund Account to finance theconstruction of the building.